In terms of price, the Industrials sector remains 5.75% below its high from January of last year and has yet to even take out the highs from earlier this year, but breadth has been more constructive recently. Just yesterday, the sector’s cumulative advance/decline line—the cumulative sum of the sector’s daily difference in the number of advancing and declining stocks—hit a new all time high.
Although that measure of breadth is making promising moves, other breadth measures have not exactly echoed that strength. In spite of the record high in the cumulative A/D line Monday, only 37% of the sector’s stocks finished above their 50-DMAs. As shown below, of all other instances of a record high in the cumulative AD line, there has never been such a low reading in the percentage of stocks above their 50-DMAs. In fact, no other readings have even crossed into the 30% range! For the vast majority of previous highs, the percentage of stocks above their 50-DMAs has sat at 70% or more.
All that is to say that most Industrials sector stocks are moving higher, but have not yet moved above potential resistance at their 50-DMAs. And even though the reading on the percentage of stocks above their 50-DMAs is low at the moment, that is not to say it is not improving rapidly. As shown below, it has risen sharply from the low of 19.18% on April 6th. Furthermore, whereas Monday’s close only saw 37% of the sector finish above their 50-DMAs, as of mid-morning Tuesday, the reading is already up another 8.2 percentage points to 45.2% as the average stock in the sector trades just 7 bps below its 50-DMA.
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